Crypto Trader Digest – Apr 4

The BitMEX Kaiko Index

Last year we moved from Bitfinex to the TradeBlock XBX Index as the underlying of our Bitcoin / USD futures contracts. The TradeBlock XBX Index was a great improvement over using a singular exchange for settlement. However, many large market makers and arbitrageurs wanted a simpler index. In order to increase liquidity, effective Friday April 29 12:01 UTC the underlying for any Bitcoin / USD futures contract will be the Kaiko BitMEX Index.

Why The Change

Many market makers and arbitrageurs complained that it was impossible to forecast the weights of the exchanges that comprised the TradeBlock XBX Index. Weightings constantly changed due to liquidity and price deviations of the member exchanges.

It is impossible to accurately match the settlement price when the weights cannot be known for certain. As a result, many market makers and arbitrageurs provide less liquidity to BitMEX than they would if the weights were known in advance. BitMEX is committed to providing the tightest spreads for all traders, and we had to find a solution to this problem.

The Kaiko BitMEX Index

BitMEX and Kaiko worked closely together to construct an index that would be fair, transparent, and easy to replicate.

Instead of five member exchanges, there will now be three (Bitfinex, Bitstamp, and OKCoin USD).

Weights will be fixed throughout the calendar month based on the past share of 30 day volume. No exchange may have a weight above 50%.

Exchange API Outages

It is not uncommon for Bitcoin exchanges to experience periods where their API is unresponsive. If an exchange’s API is down, its price will be the last price broadcast. Once the API is live again, the price will update as per normal. Exchanges will not be down-weighted during an API outage.

Exchange Price Divergence

An exchange’s weight will not be altered if its price differs greatly from the other member exchanges.

More Information

For information about the index and about receiving market data, please visit Kaiko.

The Greeks On Their Knees Again

Less than a year has elapsed since the Greeks were humiliated into taking further sustenance from their European masters. The Greeks still naively believe they have a voice in the future of their country. A leaked conversation laid bare the fact that supranational organisations such as the IMF hold all the cards. Wikileaks published a conversation between two IMF staffers advocating a credit event in Greece to force further haircuts on their debt burden.

While Greece desperately needs a reduction in their tribute to Frau Merkel, a Greek credit event won’t be a welcome development for many European banks and governments. A credit event is a polite word for default, and many are outraged that the IMF would advocate such a thing. It is even more ironic since said credit event would surely imply a haircut on the Greek debt the IMF currently holds and counts as performing loan.

This leak couldn’t have come at a worse time for the European project. The upcoming EU membership referendum in Britain is only three months away. Do the people really want to hand over part of their national sovereignty to organisations that covertly plot the demise of certain member states?

The next tranche of sustenance for Greece will not be released until the Troika is satisfied with Greece’s austerity measures. After twelve months of capital controls and suffering, maybe 2016 is the year the Greeks finally flip the bird to the EU and leave. They were sufficiently scared into submission last summer, but if more conversations like the one leaked from the IMF become known, the Greek people might finally reach the breaking point.

Brexit or Grexit may or may not happen this summer. However I am certain that it is not a foregone conclusion that the EU will exist in it’s current form. This uncertainty will cause volatility to increase across all asset classes including digital currencies. The Grexit scare last summer resulted in an over 30% price spike in Bitcoin, followed by a nasty crash once the Greeks caved. 2016 could finally be the year when Greeks rediscover their backbone, and if they do you better own some Bitcoin.

Get Aboard That ETH Train!

Even though the price appreciation of ETH/BTC has slowed down significantly, Ethereum is getting a lot of notice in the public eye and becoming a serious contender to Bitcoin. I spoke at lengths last week about the New York Times praising Ether as the next digital currency to watch, however since then there has been more interest.

To start, CNBC essentially quoted the NYT article after it came out and has also recently released another article about the valuation of Ether, noting that back in 2014 it was privately valued at around US$500m with Google Ventures interested. No doubt there would have been multiple skeptics of that number back two years ago, however now I am sure those same people are probably thinking that this is a low number for the project. It is clear that a number of industry players are more interested in blockchain technology than Bitcoin, and this is something Ethereum can offer – in fact the CFTC commissioner spoke at lengths about blockchain technology (digital ledger technology specifically), and not once throughout his whole speech did he mention Bitcoin.

Microsoft recently announced that it has signed up to R3, providing Azure’s online services to the partnership. This could be a good sign for Ether, if not price wise initially, but for publicity since Azure recently offered the Ethereum Blockchain as a Service (E BaaS) to deliver enterprise business solutions.

So what does this all mean for the price? I personally think it is a bullish thing – there’s no such thing as bad publicity and Ether is getting nothing but good publicity. Looking at the price on a technical level, price action has been flat recently with volumes dropping. In the past, the price spiked up by about by about 100% (early Feb to early March) after a similar quiet period. Are we overdue for another move up? Technical conditions and this publicity make an up move more likely than a down one. Set tight stops on the downside, and take advantage of this sideways price action to build your position. At BitMEX we offer 25x leverage on ETH with great volumes, also don’t forget that if you ever want to request a quote for a certain size then hit us up on the chat and we will reach out to the market makers!